The Maryland Energy Assistance Program, developed in 1981 after the Iran hostage crisis that had sent oil prices soaring, is now subsidizing people through the recession of the 1990s.

But, since budget reductions are occurring at a time when applications for aid are pouring in, the program is having to spread less money farther.

Across the state, 54,990 people had applied for an energy bill subsidy as of Nov. 1, compared with 47,044 at the same time last year, a 17 percent increase.

At that rate, the demand is likely to outstrip the total of 93,648 applicants from the last fiscal year. And that increase comes atop a 12 percent increase in applications the previous year, as the economy started to sour.

The Maryland Energy Assistance Program is a federally funded benefit that Congress authorized in 1981 to help poor families pay heating bills. The program helps those households earning up to 150 percent of the official poverty level. A family of four would be allowed to qualify with an income up to $1,675 a month.

Local administrators of the program agree that first-time applicants account for a good part of the increase.

The newcomers include people such as Richard and Stella Wallace, a couple in their 40s, with three children, who recently qualified for a $96 grant. That will cover most of a month's gas and electric bill at their home in Aberdeen, Mrs. Wallace says.

The Wallaces applied this year for the first time, she says, because her husband has become sick with sickle cell anemia in recent months and had to stop working as a caretaker at a National Guard armory in Bel Air. Mrs. Wallace still works as a mess attendant at Aberdeen Proving Ground.

While seeing more and more working people whose circumstances have changed, energy assistance offices are encountering more families on public assistance who are trying to make up for benefits lost elsewhere in the welfare system.

Becky Moore, who lives in subsidized housing in Woodlawn with her 2-year-old daughter, was getting by last year on $317 a month from the Aid to Families with Dependent Children program. Last month she learned that the state would cut her benefit to $294 a month. She is seven months pregnant with twins.

Moore applied for energy assistance, she says, because "I received a cutoff notice for my gas and electric." She could pay only $100 of a $156.49 energy bill last month, which put her deeper in the hole this month.

Moore qualified for a $101 grant, to be paid directly to the company, satisfying most of the debt and extending her cutoff notice for 30 days.

Last year, an applicant in Moore's income category would have qualified for a $165 grant.

Last year, Maryland received $29.3 million from the federal government's Low Income Home Energy Assistance Program. But federal budget cuts have shrunk the state's share nearly 18 percent, to about $24.1 million, this year.

The average grant will drop from $341 last year to $240 this season, says Sandra Brown, state director of the Maryland Energy Assistance Program.

Her agency still is analyzing the numbers to see how many people are applying for the first time.

"We're seeing a lot of new people who are unemployed, who haven't applied before," says Sonja Idzik, who administers the -- program in Harford County, where applications are up 14 percent.

"There's a lot more people out of work," says Kelly Parrish, who runs the program in Carroll County, where 9 percent more people are seeking help with their energy bills. "They're still typically low-income households," she says, and many may still be working, but at reduced hours that lower their incomes.

In Anne Arundel County, applications are up 33 percent; in the city, 12 percent; in Baltimore County, 25 percent; and in Howard County, 19 percent.

Besides the slumping economy, however, other factors could be at work in the surge of applications, according to Allan Hobby, the associate director of the state program.

For one thing, he says, the application form is simpler. And, for the last few years, the program has mailed applications to most of the people who received aid the previous year.

On those mailings, "we're getting extremely high returns," he says.

Last year, the federal government increased the benefit as energy prices shot up before the Persian Gulf War. Hobby says that as word got around about that higher benefit last year, more people may have decided to apply this year.

But this year, the federal government lowered the benefit, as energy prices have dropped.

Not all applicants get grants. Typically, about 10 percent of them are rejected for having too much income. Of the 93,648 who applied last year, 84,562 were served.

The new trend in applications during the recession reverses a drop of about 5 percent a year during the 1980s in the number of people served, Hobby says. The numbers went down then, he says, probably because the economy was robust and fewer people were qualifying for public assistance.